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| ▲ | spprashant 6 hours ago | parent | next [-] |
| I am not smart with stock legal-ese but I pasting something I found in a different article here. > To balance index integrity and investability, Nasdaq proposes a new approach for including and weighting low-float securities (those below 20% free float). Each low-float security’s weight will be adjusted to five times its free float percentage, capped at 100%. Securities with more than 20% free float will continue to be weighted at full, eligible listed market capitalization, while those below 20% free float will be weighted proportionally to preserve investability. > The rule reportedly includes a 5x float multiplier for low-float stocks, which would require passive vehicles to treat SpaceX as if it had significantly more tradable shares than actually exist, essentially forcing funds to chase the price. It sounds to me like a way to increase demand for low float stocks by treating the float higher than it actually is. Glad to hear the explanations about this. |
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| ▲ | dmoy 3 hours ago | parent [-] | | That's just nasdaq though, yea? VTI follows CRSP, not nasdaq. SPY doesn't follow nasdaq. Etc etc I guess figure out whether QQQ is going to do the 5x float thing? |
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| ▲ | NoLinkToMe an hour ago | parent | prev | next [-] |
| We should differentiate two matters here. 1. are your finances going to be screwed from overpaying for SpaceX IPO shares through your index fund? No because as you say, it's a small fraction of typical index funds. 2. Is this a form of financial malfeasance? I think yes. The average 401k has about $150k in it. Even if just 0.5% goes to SpaceX, that's $750 per American. That's a few hundred billion. It's serious cash. If that's going to overpaying Elon 3x or whatever it is for these shares, that's a travesty. Even if for each individual it's a tiny blip that doesn't show up in the annual ROI graphs, it's a form of corruption. Like the programmer infamous Salami slicing stories at banks. If the SpaceX IPO is wildly overpriced, even if you have just 300k in your account, yo |
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| ▲ | conductr 5 hours ago | parent | prev | next [-] |
| > If you're buying most index funds, you should literally not care about this. Disagree. Buyers of index funds should care about fiduciary and waste. This is what this seems like at this price. Granted, I’d be more concerned if the fund manager was buying it without a requirement to. The issue still remains about why are we paying so much for this stock? Make it make sense? |
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| ▲ | gruez 5 hours ago | parent [-] | | >Buyers of index funds should care about fiduciary and waste. This is what this seems like at this price. Right, but the whole point of index funds is that you're letting the market decide what's worth investing/buying (via market cap/free float weightings) and at what price. If you're making calls on what's "waste" or not, then you're no longer a passive investor and you're just picking stocks. | | |
| ▲ | conductr 4 hours ago | parent | next [-] | | Fiduciary responsibility in this context is a large umbrella of responsibilities. They should be fighting the new nasdaq rules on behalf of us. As you mentioned, this forces them to participate in fleecing the passive fund holding public and undermines the whole point of index funds. I don’t see how a fund manager could just blindly take this rule change and not make a ruckus about how it’s forcing him to break their fiduciary obligations Following the rules of the fund and being index is one thing. Sitting silently as this pump and dump is designed to fleece your clients, is something entirely different. > Starting May 1, 2026, Nasdaq rules allow large IPOs (e.g., top 40 market cap) to join the Nasdaq-100 Index within 15 trading days. This forces index-tracking funds to buy new shares, often at inflated valuations shortly after listing, a "fast entry" rule designed for mega-IPOs like SpaceX or OpenAI | |
| ▲ | dh2022 2 hours ago | parent | prev [-] | | The market will not drive index fund purchases of SpaceX - the 5x multiplier of the floating shares will. And that’s the rub. |
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| ▲ | danny_codes 6 hours ago | parent | prev [-] |
| Which is how Elon gets away with fleecing the retails. Someone with 100k in VTI is giving $100 to Elon at a p/e of 1000. You have to hand it to him, he’s the best grifter we’ve seen in years. |
